August 12, 2011

California Attorney General Files Amicus Brief Supporting Eden Township Healthcare District

On August 10, 2011, the California Attorney General's office, acting on a request by San Leandro Mayor Stephen Cassidy and San Leandro City Attorney Jayne Williams on behalf of the City of San Leandro, filed an amicus curiae or "friend of the court" brief on behalf of Eden Township Healthcare District (ETHD) in its legal battle with Sutter Health over the future of San Leandro Hospital.

The amicus brief from the California Attorney General argues that George Bischalaney, then CEO of ETHD, and Dr. Francisco Rico, then an ETHD board member, had a conflict of interest because they "… actively guided the District through contract negotiations with two private healthcare entities, Sutter Health ("Sutter") and Eden Medical Center, Inc. ("EMC"), at the same time they were receiving income from one of those entities (EMC)." After stating that "Section 1090 [of the Government Code] provides that an officer or employee of a state or local public agency may not make a contract in which he or she is financially interested." the brief argues that courts have interpreted Section 1090 to require only a financial interest and not a financial benefit for there to be a conflict-of-interest. The brief concludes, "Insofar as the trial court misapplied the law to the facts in this case, the judgment should be reversed."

The request was sent by fax on July 27, 2011, two days after the San Leandro City Council voted to file its own amicus curiae in support of ETHD.

In its own brief, the City of San Leandro described Sutter's argument that "the interest of the district and respondent Eden Medical Center "EMC" were perfectly aligned" as "sheer sophistry." The City's brief states, "…San Leandro Hospital is far from being an underutilized community resource. It is only when the Sutter views this vital community resource through the lens of private economic gain and profitability that shutting it down for an alternate use rises to a 'highest and best use.'"

The City's brief also makes the same argument about the conflict-of-interest of Bischalaney and Rico by stating "…that no person can, at one and the same time, faithfully serve two masters representing diverse or inconsistent interests with respect to the service performed."

The California Nurses Association's amicus curiae brief, filed on August 8, 2011, states that in 2008, while Bischalaney was CEO for ETHD and as CEO and Director for EMC, Bischalaney received a total of $601,865 in compensation from EMC and Sutter-related organizations. The brief also states that Rico was a 56% owner of Alameda Anesthesia Associates Medical Group, which received $2.2 million from EMC/Sutter each year in 2007, 2008, and 2009.

While there is no guarantee that an amicus curiae brief will affect a court's decision, the amicus filed by the California Attorney General, which is responsible for enforcement of government code on conflict-of-interest, is certain to have supporters of San Leandro Hospital optimistic that the trial court decision will be overturned.

Posted by Mike Katz-Lacabe at August 12, 2011 9:33 AM | TrackBack
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